THE SUN IN 2009

US Solar Industry; Year in Review 2009
April 15, 2010 (Solar Energy Industries Association)

THE POINT
A careful study of the U.S solar energy industry’s 2009 performance would not immediately reveal the nation was in the greatest recession it has experienced since the Great Depression. The industry grew in 2009. It increased its new installations, it added jobs, it increased the amount of electricity it provides the U.S. and its total revenues grew 36%.

Only a comparison to its own 2008 performance reveals evidence of the economic downturn: Growth was not as impressive for the solar industry last year as in the year before, which is not to say the numbers were not impressive.

Total U.S. solar electric capacity, the combined installed capacity of photovoltaic (PV) installations and concentrating solar power (CSP) from solar power plants (SPPs), passed 2,000 megawatts. The industry added 10,000 new jobs. Total U.S. solar thermal capacity grew to ~24,000 thermal megawatts. Industry total revenues increased 36%. Three new SPPs went on line. The residential PV market doubled. Annual installation grew 37% from 351 megawatts in 2008 to 481 megawatts in 2009. $2+ billion was invested in new and upgraded solar factories. Solar water heating (SWH) installations increased 10% and, in an economy that did not favor luxuries like heated swimming pools, the solar pool heating (SPH) market only fell off 10%.

Can the solar industry sustain its momentum? The best answer to that question comes in what is one of the most profound factoids in US Solar Industry; Year in Review 2009, from the Solar Energy Industries Association. Venture capitalists seem to think solar’s best is yet to come. They invested $1.4 billion in solar companies in 2009, more than they invested in any other New Energy economy sector. Considering that the total U.S. solar industry 2009 volume was ~$4 billion, the $1.4 billion bet by VCs is pretty extraordinary.

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Reasons to believe in the sun: Federal support. A provision in the 2008 financial rescue package (a) extended the 30% federal investment tax credit (ITC) for solar projects for 8 years, (b) uncapped the ITC, allowing it for the full cost of a solar project, and (c) allowed utilities to benefit for the first time from the ITC. A provision in the American Recovery and Reinvestment Act of 2009 (ARRA) (a) allowed Treasury grants in place of the ITC where developers needed the cash and (b) gave solar equipment manufacturers $600 million in manufacturing tax credits.

Reasons to believe in the sun: State and local policies. More states added Renewable Electricity Standards (RESs) requiring regulated utilities to obtain designated portions of their power from New Energy resources by a designated year. 11 states added or increased solar-specific RES requirements, bringing the total that have them to 18. States put ARRA funding to work as solar system rebates, solar incentives and to create solar industry training programs.

More significantly, 16 states made provisions for municipalities to institute property-assessed clean energy (PACE) financing programs that allow homeowners to add the cost of solar systems to their property tax assessments, eliminating upfront costs and other obstacles to system installations.

Reasons to believe in the sun: Solar Resources. The solar PV industry has 6,000 megawatts of announced projects in its 2010 pipeline. 3 new solar power plants (SPPs) using concentrating solar power (CSP) technology came on line in the 2005-to-2008 period and 3 more were added in 2009. 81 megawatts of SPP capacity are expected in 2010. Only the resolution of siting issues and the development of new transmission stands in the way of an SPP boom. Both the Department of the Interior (DOI) and the Bureau of Land Management (BLM) moved siting resolution forward.

Lawrence Berkeley National Laboratory estimates U.S. solar installed capacity will grow to ~9,000 megawatts by 2025.

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THE DETAILS
Despite difficulties in housing and construction, 429 megawatts of grid-tied photovoltaic (PV) capacity was installed in 2009, putting U.S. solar over the 1 gigawatt (1,000 megawatts) mark for cumulative installed capacity. There was also an estimated 40 megawatts of new off-grid capacity. This was an impressive 38% increase, though less than 2008’s 84% increase. Utilities tripled their solar PV ownership from 22 megawatts to 66 megawatts. Residential volume grew 101% from 2008's 78 megawatts to last year's 156 megawatts.

Solar is less than 1% of U.S. energy. But Lawrence Berkeley National Laboratory estimates existing requirements and goals will grow solar’s installed capacity to ~9,000 megawatts by 2025. This will grow the economies of scale that will bring costs down to grid parity.

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ARRA had a range of provisions that boosted all the New Energies in 2009. Besides the Treasury Grant Program and the subsidy for manufacturers, it eliminated penalties for subsidized energy financing and opened a range of partnership financing opportunities to the solar industry. It directed billions in funding for solar research development and deployment.

With 10 months to run until ARRA's Treasur grant provision expires December 31, 2010, $81 million in Treasury grants have backed 182 solar projects worth $271 million. (13 solar thermal and 169 solar electric projects of 46.5 megawatts over 30 states)

Department of Energy (DOE) manufacturing backing went to 60 solar factories that are expected to eventually create thousands of high quality blue collar jobs. DOE also put $115 million into its Office of Energy Efficiency and Renewable Energy Solar Energy Technologies (SET) Program. $1.6 billion went to Clean Renewable Energy Bonds (CREBs), $2.7 billion went to fund Energy Efficiency and Conservation Block Grants and $3.1 billion went into State Energy Program (SEP) grants.

Virginia, Maryland, Delaware, Massachusetts, New York, Pennsylvania, Vermont and Wyoming are using SEP allotments to create new or fund existing solar rebate programs. Other states are using SEP money for competitive grants, large installations, manufacturing incentives, research centers, low-interest financing and worker training.

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Federal spending supported 17,000 new solar-related jobs in 2009, 10,000 direct jobs in solar as well as 7,000 indirect jobs. This brought jobs in the U.S. solar industry and its supply chain to ~46,000, and the growth trajectory projects to 60,000+ solar industry jobs by the end of 2010.

The U.S. continued to maintain enough solar equipment manufacturing capacity to meet domestic demand but also continued to fall behind other places in the world in total manufacturing capacity.

16 states (California, Colorado, Illinois, Louisiana, Maryland, Nevada, New Mexico, New York, North Carolina, Ohio, Oklahoma, Oregon, Texas, Vermont, Virginia and Wisconsin) made provisions enabling municipalities to provide property-assessed clean energy (PACE) financing programs to homeowners. PACE programs finance solar systems through property tax assessments, ensuring the availability of credit, eliminating upfront costs and providing for the transfer of the solar system to new property owners.

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30 states and D.C. now have an RES and 18 have a solar or distributed generation (DG) carve-out. 5 provide extra credits for solar or DG. Nevada upped its solar requirement from 5% to 6%, Missouri added a 2% solar carve-out, Illinois added a 6% carve-out and D.C. upped its solar carve-out to 0.4 percent of retail sales. 4 states now have solar water heating requirements and Arizona’s is starting to drive its SWH industry.

2009 PV module price – half the cost of a system – fell 40% from $3.50-$4.00 per watt in mid-2008 to $1.85-$2.25 per watt. Average installed cost, including labor, fell ~10%. More than 6,000 megawatts of announced projects are in the PV pipeline for 2010.

3 new solar power plants (SPPs) using concentrating solar power (CSP) technology came on line in the 2005-to-2008 period after a 15-year hiatus and 3 more were added in 2009. There are 432 megawatts of U.S. SPP capacity now in operation. 81 megawatts are expected to come on line in 2010. Only the resolution of siting issues and the development of new transmission stands in the way of a boom in SPPs.

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Moving siting ahead, the Department of the Interior added 4 Renewable Energy Coordination Offices in California, Nevada, Wyoming and Arizona and put renewable energy teams at 5 other offices. The Bureau of Land Management (BLM) picked 14 solar energy projects for ARRA funding, if they are permitted in 2010.

Solar water heater (SWH) shipments increased 10% but the use of solar pool heating (SPH) systems declined 10%. Thanks to ARRA provisions, SWH growth is expected to go on in 2010. But like construction and real estate, the SPH market will likely continue to be off. Energy Star certification of SWH and SPH systems helped. Solar cooling is drastically under-used in the U.S. and could cut a huge portion of the energy used by residential and commercial buildings.

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Germany continued its growth with ~3,800 megawatts of new installed PV capacity in 2009 (twice the 1,500 megawatts it added in 2008) to regain leadership of the international market. This huge growth led to a cut in its 2010 incentives.

Spain’s 2008 growth was so big (2,710 megawatts) it had to drastically cut its incentives and installed only 180 new megawatts of PV and CSP capacity in 2009. Spain added the world’s most SPP megawatts in 2009 and moved to second in the world (to the U.S) with 181 megawatts of installed SPP capacity.

Italy was the big growth story in 2009, going from 338 megawatts to ~700 megawatts. With strong incentives and good sun, Italy is expected to keep growing.

Japan improved its incentives and recovered its momentum in solar in 2009 and added 484 megawatts.

With a big feed-in tariff, the Czech Republic emerged in 2009 by adding 411 megawatts of installed capacity. This was more new PV per capita (~40 watts per person) than any country except Germany. There is talk of a need to cut the Czech incentive back.

China and India announced ambitious goals of 20,000 megawatts for 2020.

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QUOTES
- From the SEIA report on 2009: “Two utility-scale solar power projects became the largest and second largest installations in the U.S. The 25-MWac DeSoto Next Generation Solar Energy Center and the 21-MWac FSE Blythe bumped the 14-MWac Nellis Air Force Base installation into third place.”

- From the SEIA report on 2009: “With new innovations in the installation process, increasing economies of scale and innovative equipment increasing energy yields, the cost reductions are expected to continue. PV is becoming an increasingly attractive and secure investment.”

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- From the SEIA report on 2009: “Later this year, the U.S. Department of Energy is expected to release a report that explores the potential for solar energy to provide a significant share of the nation’s electricity by 2030. The report will explore the costs and benefits of realizing this solar-powered future and paint a picture of how it would work. This vision would require hundreds of thousands of new solar megawatts, many times more than the current global solar capacity. However, this industry has shown extraordinary ability to grow quickly to meet any demand.”

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- From the SEIA report on 2009: “In October 2009, SEIA launched its “Solar Bill of Rights” campaign. The Solar Bill of Rights is SEIA’s grassroots advocacy effort to engage with all Americans, politicians, activists and celebrities to build support for eight rights designed to create a policy environment that allows solar to compete on a level playing field with fossil fuels. Nearly 2,000 people signed the Solar Bill of Rights during the first four months of the campaign.”